,Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
2p 2p 2p
Chapter 1 The Financial Reporting Environment
2p 2p 2p 2p
1.1 Overview of Financial Reporting 2p 2p 2p
1) The financial reporting process generates three basic financial stateme
2p 2p 2p 2p 2p 2p 2p 2p
nts. Answer: FALSE
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
2) The demand for financial information is based on market participant dema
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
nd. Answer: TRUE
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
3) Managers of economic entities are best considered to be users of financial informa
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
tion. Answer: FALSE
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
4) Managers of economic entities are best considered to be preparers of financial informa
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
tion. Answer: TRUE
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly tra
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
ded companies.
2p
Answer: TRUE 2 p 2 p
Diff:2p2
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP
AACSB:2 p 2 p Application2pof2pknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded compa
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
nies. Answer: FALSE
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP
AACSB:2 p 2 p Application2pof2pknowledge
1
Copyright © 2022 Pearson Education, Inc
2p 2p 2p 2p 2p
.
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
and oversees the audits of public companies in the United States.
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
Answer: FALSE 2 p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP
AACSB:2 p 2 p Application2pof2pknowledge
8) Financial accounting standards influence the behavior of managers and other internal u
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
sers. Answer: TRUE
2p 2 p
Diff:2p2
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examp
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
les of proactive factors within the legal, economic, political, and social environment.
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
Answer: FALSE 2 p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
10) Financial information includes information that is not governed by rules set forth by the accou
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
nting standard-setting bodies.
2p 2p
Answer: TRUE 2 p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
11) What is the term that describes the process of identifying, measuring, and communicating fina
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
ncial information about an economic entity to various user groups?
2p 2p 2p 2p 2p 2p 2p 2p 2p
A) financial reporting 2p
B) accounting standard setting 2p 2p
C) financial statement 2p
D) financial accountin 2p
g Answer: D
2p 2 p
Diff:2p2
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
2
Copyright © 2022 Pearson Education, Inc
2p 2p 2p 2p 2p
.
, 12) Which element of financial accounting involves identifying the individuals who demand fina
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
ncial information?
2p
A) financial information 2p
B) economic entity 2p
C) user groups
2p
D) legal, economic, political, and social environme
2p 2p 2p 2p 2p
nt Answer: C
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
13) Which of the following is not one of the four basic financial statements?
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
A) balance sheet 2p
B) trial balance
2p
C) cash flows statement
2p 2p
D) statement of comprehensive incom 2p 2p 2p
e Answer: B
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
2p 2p 2p 2p 2p 2p 2p
A) Financial Accounting Standards Board
2p 2p 2p
B) Public Company Accounting Oversight Board
2p 2p 2p 2p
C) International Accounting Standards Board 2p 2p 2p
D) Securities and Exchange Commissio 2p 2p 2p
n Answer: A
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of p
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
ublic companies in the United States?
2p 2p 2p 2p 2p
A) Financial Accounting Standards Board
2p 2p 2p
B) Public Company Accounting Oversight Board
2p 2p 2p 2p
C) American Institute of Certified Public Accountants
2p 2p 2p 2p 2p
D) Securities and Exchange Commissio 2p 2p 2p
n Answer: B
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP
AACSB:2 p 2 p Application2pof2pknowledge
3
Copyright © 2022 Pearson Education, Inc
2p 2p 2p 2p 2p
.
2p 2p 2p
Chapter 1 The Financial Reporting Environment
2p 2p 2p 2p
1.1 Overview of Financial Reporting 2p 2p 2p
1) The financial reporting process generates three basic financial stateme
2p 2p 2p 2p 2p 2p 2p 2p
nts. Answer: FALSE
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
2) The demand for financial information is based on market participant dema
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
nd. Answer: TRUE
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
3) Managers of economic entities are best considered to be users of financial informa
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
tion. Answer: FALSE
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
4) Managers of economic entities are best considered to be preparers of financial informa
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
tion. Answer: TRUE
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly tra
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
ded companies.
2p
Answer: TRUE 2 p 2 p
Diff:2p2
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP
AACSB:2 p 2 p Application2pof2pknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded compa
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
nies. Answer: FALSE
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP
AACSB:2 p 2 p Application2pof2pknowledge
1
Copyright © 2022 Pearson Education, Inc
2p 2p 2p 2p 2p
.
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
and oversees the audits of public companies in the United States.
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
Answer: FALSE 2 p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP
AACSB:2 p 2 p Application2pof2pknowledge
8) Financial accounting standards influence the behavior of managers and other internal u
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
sers. Answer: TRUE
2p 2 p
Diff:2p2
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examp
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
les of proactive factors within the legal, economic, political, and social environment.
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
Answer: FALSE 2 p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
10) Financial information includes information that is not governed by rules set forth by the accou
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
nting standard-setting bodies.
2p 2p
Answer: TRUE 2 p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
11) What is the term that describes the process of identifying, measuring, and communicating fina
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
ncial information about an economic entity to various user groups?
2p 2p 2p 2p 2p 2p 2p 2p 2p
A) financial reporting 2p
B) accounting standard setting 2p 2p
C) financial statement 2p
D) financial accountin 2p
g Answer: D
2p 2 p
Diff:2p2
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
2
Copyright © 2022 Pearson Education, Inc
2p 2p 2p 2p 2p
.
, 12) Which element of financial accounting involves identifying the individuals who demand fina
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
ncial information?
2p
A) financial information 2p
B) economic entity 2p
C) user groups
2p
D) legal, economic, political, and social environme
2p 2p 2p 2p 2p
nt Answer: C
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
13) Which of the following is not one of the four basic financial statements?
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
A) balance sheet 2p
B) trial balance
2p
C) cash flows statement
2p 2p
D) statement of comprehensive incom 2p 2p 2p
e Answer: B
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
2p 2p 2p 2p 2p 2p 2p
A) Financial Accounting Standards Board
2p 2p 2p
B) Public Company Accounting Oversight Board
2p 2p 2p 2p
C) International Accounting Standards Board 2p 2p 2p
D) Securities and Exchange Commissio 2p 2p 2p
n Answer: A
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP/IFRS
AACSB:2 p 2 p Application2pof2pknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of p
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p
ublic companies in the United States?
2p 2p 2p 2p 2p
A) Financial Accounting Standards Board
2p 2p 2p
B) Public Company Accounting Oversight Board
2p 2p 2p 2p
C) American Institute of Certified Public Accountants
2p 2p 2p 2p 2p
D) Securities and Exchange Commissio 2p 2p 2p
n Answer: B
2p 2 p
Diff:2p1
Objective:2 p 1.12pIFRS/GA
AP:2 p GAAP
AACSB:2 p 2 p Application2pof2pknowledge
3
Copyright © 2022 Pearson Education, Inc
2p 2p 2p 2p 2p
.
